Changing lanes

William Freivogel discusses how to avoid disqualification on matters as a result of non-lawyers changing firms

 

Although there has not been an epidemic of law firms being disqualified by lateral non-lawyers, disqualifications have happened. So, law firms need to be vigilant where the consequences of such a move could be the loss of a highly remunerative piece of business. This article will discuss what screens law firms should put in place to avoid problems with non-lawyers.

Before discussing non-lawyers changing firms, let’s consider some background regarding lawyers changing firms. Most of the jurisprudence about lawyers changing firms has been generated in the United States and Canada.

Canada is the simplest to deal with because all provinces deal with the issue of lawyers changing firms in the same manner. All provinces, except Quebec, have adopted an ethics rule dealing with a lawyer changing firms, where that lawyer worked on a case pending between the firms.

The rule provides that the lawyer’s new firm can avoid disqualification by erecting a screen between him and the rest of the firm. It is believed that Quebec courts have fashioned an approach similar to the rule in the other provinces.

A few decisions in Canada have recognised that the rule with respect to non-lawyers, such as paralegals, assistants and secretaries, should be the same as that for lawyers.

The situation with respect to lawyers changing firms in the US is considerably more complex. First, in about half of the states, the only way the new firm can avoid disqualification where the moving lawyer has significant information about the case in question is to obtain a conflict waiver from the client of the old firm. That waiver will invariably require that the new firm erect the screen. Without the waiver, the new firm may very well be disqualified, screen or no screen.

The other states have an ethics rule that provides that if the new firm screens the lawyer, it is not disqualified and no waiver is necessary. But, those rules vary. For example, in some states, if the moving lawyer had a significant role in the case at the old firm, the screen will not work without a waiver. Other screening states do not make that distinction.

None of the states appears to have an ethics rule specifically dealing with the screening of non-lawyers. However, several states have developed judge-made rules providing that a screen will prevent the disqualification of the firm receiving the non-lawyer. This is true even of states that do not recognise screens for lawyers.

Caution is advised, however, as one or two states have specifically rejected screens for non-lawyers. In those states, law firms bringing in non-lawyers from opponent law firms must obtain conflict waivers from the affected clients of the old firms.

Many states have no reported decisions on the efficacy of screens for non-lawyers. One might predict that, when the issue arises, a court would approve a screen, but one cannot be certain.

While the focus of this article is the firm that brings in the non-lawyer, a word about the old firm might be in order. Non-lawyers should be aware that the law of agency provides that agents should maintain the confidences of both current and former principals.

Thus, non-lawyers should protect confidences learned at their former law firms. Requiring all firm personnel to sign a confidentiality agreement should provide a reminder to firm personnel not to disclose confidences of their former law firms.

 

Case study

Peter has worked as a paralegal at his old firm for seven years. He has had myriad duties on a number of litigation cases, ranging from categorising documents to abstracting deposition transcripts. His document work has included identifying documents subject to attorney-client privilege.

Thus, Peter has been exposed to many sensitive documents and computer files, including those that will be withheld from production to litigation opponents.

Peter has an opportunity to move from his old firm to a new firm, which happens to be in the same city as his old firm, for increased compensation.

His new firm, like his old firm, has an active litigation practice. Indeed, his old firm and new firm have been on opposite sides of cases for many years and a number of such cases are pending at the time Peter makes his move.

A few days after Peter arrives at his new firm, a lawyer asks him to accompany the lawyer to a deposition to assist in the handling of exhibits. When given the documents the day before the deposition, Peter notes that they relate to a case he had worked on at his old firm. Peter immediately goes to the lawyer and relates his involvement in the case at his old firm.

Should Peter go to the deposition? Almost certainly not. The lawyer at his old firm will recognise Peter and may recall Peter’s involvement in the case. His old firm may move to disqualify his new firm from arguing that Peter has tainted his new firm with his old firm’s confidences about the case.

Suppose Peter does not attend the deposition, but lawyers at his old firm, knowing Peter has arrived at his new firm, make the motion anyway. Is his new firm disqualified?

In a hotly-contested piece of litigation, the parties may resort to all manner of devices to obtain an advantage. This may well include a motion to disqualify a law firm that brought in a non-lawyer who had previously worked on the other side of the case.

Rather than await a motion to disqualify from the non-lawyer’s old firm, his new firm should consider going to the court and seeking a declaratory finding that it has set up an adequate screen and that it should be permitted to continue in the case.

If there is as yet no litigation in which to do this, the non-lawyer’s new firm should consider suing for a declaratory judgment that it has no conflict. However, such a pre-emptory strike is not recommended where it does not seem the other side is particularly excited about the arrival of the non-lawyer. Usually, the old firm first sends a letter or email requesting the new firm to step aside. That would seem the time to launch a pre-emptory strike.

 

 

Conflicts analysis

What should a firm do about these issues when bringing in a non-lawyer from another law firm, or, perhaps, from a company law department?

First, many law firms do nothing at all because, as mentioned earlier, there have been relatively few instances when a moving non-lawyer has caused the disqualification of an entire firm.

Perhaps most non-lawyers know instinctively not to get involved in matters at their new firms that they worked on in their old firms. Luck has also probably played a role in keeping these firms out of trouble.

Suppose a firm wants to be proactive in avoiding a problem with a new non-lawyer, especially in long-running lucrative litigation matters. First, during the interview process, the new firm will want to know where the non-lawyer has worked. Then, it will find out whether there are matters pending with those other firms. If so, it will provide the candidate with a list of those matters. If the candidate does not recognise those matters, nothing further need occur.

It is worth considering confidentiality rules at this stage. Experts in legal ethics in the US are increasingly adopting the view that the identity of the client is subject to confidentiality rules.

Thus, a law firm that discloses the identity of its clients to a prospective non-lawyer employee technically violates ABA Model Rule 1.6. Commentators have also adopted the view that this type of information must be exchanged to avoid conflicts of interest, thus tolerating a technical violation of Rule 1.6.

A special ABA commission has recommended the adoption of an exception to Rule 1.6 to accommodate the need to exchange client information for conflicts analysis purposes.

If the candidate recognises a matter, first consider getting a waiver from the client of the old firm. As pointed out above, the client of the old firm will almost certainly insist upon a screen.

Requesting waivers carries risks. If the client of the old firm refuses, the new firm is faced with not hiring the candidate or possibly being disqualified in the matter in question.

Where the law of the jurisdiction clearly provides for a screen of a non-lawyer without a waiver, then proceed with the screen.

 

Screen requirements

What should be the main features of a screen for non-lawyers? The rules for screening lawyers provide a guide; the following should be done at a minimum.
 

1. Require the non-lawyer to sign an undertaking that he will not access the files of the matter in question and not discuss the matter with the lawyers and other personnel working on it.
2. Circulate a memorandum to all firm personnel directing that the non-lawyer in question is not to have contact with the matter and directing that firm personnel are not to discuss the matter with the non-lawyer.
3. Restrict the non-lawyer’s access to the physical files of the matter, as well as document management and other computer systems.
4. Do the above before the non-lawyer starts work. Timeliness of the screen is crucial. A number of lawyer disqualifications have resulted from delays of just a few days. 
   
   Where the conflict could not be detected during the hiring process, establish the screen immediately upon learning of the conflict. In lawyer cases, some courts have forgiven the delay where it was understandable and there appeared to have been no harm done.
5. Maintain documentation that the above steps have been taken. Courts frequently react well to a precise and definitive contemporary written statement of the steps taken to ensure that no prejudice occurs to the client of the previous firm.
   
   The size of the new firm could be a factor as to whether a court will recognise a screen. Courts have not been altogether consistent about this in lawyer disqualification matters.
   
   Some courts have said the new firm was simply too small to expect a screen to be effective. In a few cases, the court has not approved a screen where the firm was large but the lawyer was assigned to a group of lawyers in a small branch office who were handling the matter in question. In other cases, the court was not concerned about the size of the new firm where an effective screen had been erected in a timely manner and there had been no showing of harm.

billfreivogel@me.com